This week Nicholas Snowden, Senior Solicitor at Clarkslegal LLP and Andrew Smith, Employee Benefits Consultant, Towry Law present their ideas on how to handle employees that like to dabble in dangerous sports.
The question:
We have an employee who takes part in rally racing as a hobby. He injured his back last weekend whilst taking part in a rally and has had to visit the doctors for some strong pain-killers.
As he is a key employee and manages up to six sites as a Contracts Manager, this has led us to pose a number of questions: “What happens if he seriously injures himself and is absent from work for a long period of time?” And “What happens if, god forbid, he kills himself?” – will our death in benefit insurance scheme have to be paid even though he is voluntarily taking in a dangerous sport?
The answer:
Nicholas Snowden, Senior Solicitor at Clarkslegal LLP
1. What happens if the Contracts Manager injures himself and is absent for a long period of time?
There will be two main issues. Firstly, what will he be paid during his absence? The answer to the first question depends on the contents of his contract of employment or your sick pay policy. These can provide for shorter periods and/or lower levels of company sick pay during a period of absence, where the absence is caused by injury sustained while participating in recreational activities. In many cases, however, no such differentiation will have been made and normal contractual sick pay, if it is provided for, will be due.
You could seek to amend the contracts of your employees or your sick pay policy. However, as this would constitute a detrimental change, you will need the consent of the affected employees. In practice, for employees like your Contracts Manager, who participate in dangerous activities in their own time, that consent is unlikely to be forthcoming, unless they can be tempted with a lump sum in consideration.
A unilateral variation, backed up by an argument that the employee impliedly consented to the contractual change, would probably not work in this kind of case. This is because an employee cannot sensibly be said to have impliedly consented to a change which does not affect him/her immediately.
Alternatively, you could go through a consultancy process with staff and dismiss and offer re-engagement on the new terms to those who do not agree the change. Unfortunately, this approach involves the risk of unfair dismissal claims, as well as not being particularly positive from an employee relations perspective.
Secondly, can he be dismissed and replaced? You will need to approach this as you would any other case of long term absence. That is to say, you will have to obtain a medical prognosis of the likely duration of the employee’s absence and the likelihood of him being able to return to normal working.
If the prognosis is bad, a fair dismissal for incapacity may be possible. Otherwise, you will have to be patient and support him in his efforts to return to work. If the injuries leave him disabled and unable to carry out his tasks in the same way, you will have to consider reasonable adjustments which could be made to enable him to carry out his duties.
2. Is a death in service benefit payable if an employee dies taking part in a dangerous activity in his own time?
This will depend on the employee’s contract of employment and the terms of the insurance policy. Ideally, the contract of employment should state that the right to a death in service payment is subject to the terms of the insurance policy.
If this is not the case and the insurance company refuses to pay because the circumstances of the particular employee’s death mean that it does not come within the terms of the policy, there is a risk that the company will still be contractually liable to make the payment to the employee’s estate.
If your contract of employment is deficient in this way, it will be important to amend it. In terms of amending the contract for all staff, the same issues discussed above will arise.
However, it is likely that if employees refuse the change after reasonable consultation, that dismissal would be fair for ‘some other substantial reason’ and you could then offer re-engagement on the new terms. This is because the detriment to the employees of the change is unlikely to outweigh the detriment to the company of not making it, which will be the issue for consideration by a Tribunal in deciding whether any such dismissals are fair.
Andrew Smith, Employee Benefits Consultant, Towry Law
The answer lies in the terms of the contract – some group policies will be okay if the activity pre existed but I couldn’t say this without seeing the contract. If you are at all unsure after looking at the contract I would notify your insurer of his rally driving. Again it depends on the insurer and the level of cover but in general this sort of thing can be insured, although there may be some loading on the premium.
As he is a key employee you should also consider the impact to the business if he were to die. If there is any impact financially e.g. impact on company revenue, cost to replace him etc then a key person policy should also be taken out. Death in service benefit is designed to provide money to his dependents whereas key person insurance is designed to provide money for the business.
If you decided to go down that route, at application stage the rally driving should be declared. If he were to die the proceeds of the death in service would go to his dependants and the proceeds of the key person policy would be paid to the company.
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